BoE Broadbent says Japan in Big Monetary Experiment

Japan is in the middle of a “big monetary experiment,” from which market volatility should be expected, the Bank of England’s Ben Broadbent told CNBC on Thursday.

“Japan, of course, is in the midst of what amounts to a big monetary experiment, so I think we should see the volatility in equity markets and indeed in bond markets in that context,” said Broadbent, who is a member of the Bank of England’s Monetary Policy Committee.

His comments came after the Japanese Nikkei plummeted 7 percent on Thursday on strength in the yen, a spike in Japanese government bond yields and new evidence of weakness in China’s economy.

The yen holds an inverse correlation with the Nikkei as strength in the currency is seen as negative for the market that has a heavy concentration of exporters.

Markets were also rattled by Wednesday’s comments by Federal Reserve chief Ben Bernanke. U.S. stocks fell nearly 1 percent at the close on Wednesday after Bernanke’s testimony to the U.S. Senate on Wednesday, and the publication of minutes from the Fed’s last policy meeting.

However, Broadbent described Bernanke’s speech as “unsurprising.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza